It has become apparent the effects of globalization has changed the marketplace so much in the past few decades that a much faster response is demanded from producers and their supply chain. This is done by effective supply chain management, which is the integration of key business processes acrosss the supply chain within organisiations. The objective of this is to create a system of best value for the entire supply chain including the consumer. In recent years, many firms have realised the importance of the optimization and streamlining of the supply chain management processes, it has since become the focus for many firms. Mangaing the supply chain has been seen to increase productivity and consumer satisfaction which leads to a growth in sales and overall company performance. Zara is the optimum example of a company that has effectively maintained and updated it supply chain management process to best benefit its consumers in todays marketplace. They were the first retailer to adopt the strategy of “fast fashion”. Aiming to have a product in store within 15 days of its inception. This has made them excel in todays economy to become the third biggest retailer in the world. It is widely recognized that Zara’s supply chain is what gives it it’s compeditive advantage over competing retailers. With the growth of the internet, real time information, changing consumer behaviour and technology SCM has changed greatly over time. There is some disagreement over what processes should be considered. However Charu Chandra & Sameer Kumar have correctly pinpointed the main areas to be focused on in todays marketplace: • Organizational structures • Supplier & Distributor relationships • Overall supply chain coordination • Improved inter & ... ... middle of paper ... ... Works Cited Susan Berfield & Miguel Baigorri, “Zara’s Fast Fashion Edge” Business Week, November 13th 2013 Supply Chain Management in theory and practice: a passing fad or fundamental change? Charu Chandra & Sameer Kumar, Industrial Management & Data Systems Heckmann, Shorten, Engel (2003) Supply Chain management at 21: The hard road to adulthood Supply Chain Management in theory and practice: a passing fad or fundamental change? Charu Chandra & Sameer Kumar, Industrial Management & Data Systems Hammer, Michael, “The Superefficient Company,” Harvard Business Review, Vol 79, No 9 (2001) Page 84 "Rapid-Fire Fulfillment," Harvard Business Review, Vol. 82, No.11, November 2004 Susan Berfield & Miguel Baigorri, “Zara’s Fast Fashion Edge” Business Week, November 13th 2013 "Rapid-Fire Fulfillment," Harvard Business Review, Vol. 82, No.11, November 2004.
WISNER, J.D., TAN, K. and LEONG, G.K., 2009. Principles of supply chain management : a balanced approach / Joel D. Wisner, Keah-Choon Tan, G. Keong Leong. Mason, OH : South-Western Cengage Learning, 2009; 2nd ed. pp 111-113,262
In the 1960s through the 1970s, companies realized strong engineering, design, and manufacturing functions were strong market strategy keys to create and capture customer loyalty. As the demand for new products rose in the 1980s, these market requirements were to increase their flexibility and responsiveness to adapt existing products and processes or to develop new ones in order to meet customer needs. As manufacturing improved in the 1990s, managers began noticing material and service inputs involving suppliers and their major impact on an organization’s ability to meet customer needs. As a result of these changes, organizations now find that it difficult to manage their own organizations. First, they must be involved in the management of their network of all upstream firms that provide directly or indirectly, as well as the network of downstream firms, which are responsible for delivery and market service of the product to the end customer. In order to succeed, managers have to realize that they cannot do it alone and they must work together on a daily basis with the whole organizations in their supply chains. Because supply chain management involves all functions within an organization, managers need to know what a supply chain is, why it is important, and the impact of supply chain management on the success and profitability of their organization. Today, Wal-Mart topped the list of the America’s biggest companies on the Fortune 500 list, “with sales of almost $345 billion — more than a quarter of a trillion dollars” (Forbs). Wal-Mart’s supply chain management is becoming recognized as a core competitive strategy.
Through the use of literary articles and other academic material this paper will review the strategic supply chain initiatives that gives Zara an advantage over it’s competitors. The report will examine other fashion retailers supply chain model to show how Zara has mastered the supply chain model to gain advantage over others.
As a Nutshell Defining and inspection of the Zara's Fashion stores and on understanding the impact of purchasing of supply chain strategies. The manufacturing ZARA clothing company has superb development of supply chain, practical and innovative distributional processes.
‘Supply chain management integrates supply and demand management within and across companies. It encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thir- party service providers, and customers’. (Web: Council for Supply Chain Management Pr...
Average markdown ratio of Zara is set at approximately 50 per cent according to Sull and Turconi (2008) and as opposed to similar brands Zara sold out only 15 per cent of its products on sale basis. All these factors have enabled Zara to expand its sales and profits over 20 per cent per year. Zara is credited by its Agile Supply Chain and most market researchers attribute the success it has made thus far to its success with its efficient Agile Supply Chain (Dutta, 2002; Tiplady, 2006; Sull and Turconi, 2008; Zhang, 2008). Zara’s success can be summarized into four factors.
Zara has several strengths, most noticeably, their 1,700 stores in 86 countries around the world. As an international brand company Zara reaches every part of the world. Also, Zara chooses where to locate their stores carefully because they are aiming for a direct communication strategy to promote their products. They have a unique approach in locating their store in each country. Next, in terms of their distribution system, Zara controls most of the supply chain and distribution of its prod...
... unordinary supply chain, which gives them a highly competitive advantage. They also successfully introduced a new, unique business model into the apparel manufacturing and retail industry. Zara chose to handle design, production and distribution in-house and concentrate the whole production close to their headquarters in Spain. By the entire process, Zara can react much faster than its competitors do to both the ephemeral trends in the world of fashion and the capricious tastes of its customers. They have achieved their success by thinking out of the box. Their success is directly related to their ability to understand their customer’s most innate needs and desires and tie these to successful innovation strategies, which ultimately lead to these new and unique approaches to their business.
Lean manufacturing and just-in-time processing are great business strategies that can severely stress a supply chain. The supply chain and supply chain management is a critical operations management element for any major company to succeed and remain competitive in the global market. The supply chain is one of many pieces critical to maximizing value to the end customer and requires close management to minimize external impacts. If a company is relying on another company to supply the raw materials needed for their production line, then impacts to this other company could impact their supply chain. Careful risk management is needed to optimize performance. As a company expands into global markets and global suppliers, this risk and management challenge is multiplied. The global nature of the company could impact important activities such as transportation, funds transfers, suppliers, distributors, accounting and information sharing. Disruption to the supply chain can significantly reduce revenue, cut market share, inflate costs and threaten production. A major disruption would have obvious impacts to profit, but could have additional intangible impacts to the credibility of the company if products are not delivered on time.
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
[8] Supply chain lessons for the new millenium: a case of Micromax informatics Integral Review –by Salma Ahmed, A Journal of Management-ISSN: 2278-6120, p-ISSN: 0974-8032, Volume 5, No. 2, Dec.-2012, pp 53-61) .
Capabilities of Zara, or the required resources needed to exploit the opportunities and execute this conceptual strategy, are numerous for Zara. Zara maintains tight control over their production processes keeping design and manufacturing in-house or with some strategic partnerships located nearby Headquarters. Currently, Zara maintains 80% of its production processes in Europe, 50% in Spain which is very close to La Coruña headquarters. They have strategic agreements with local manufacturers that ensure timely delivery and service. Through these strategic partnerships and the benefits brought by this proximity of manufacturing and operational processes, Zara maintains the flexibility necessary to design and produce over 12000 new items annually. This capability allows Zara to achieve their strategy of expedited response to consumer demand.
The key performance drivers of Supply Chain Management (SCM) are - facility effectiveness, inventory effectiveness, transportation effectiveness, information effectiveness, sourcing effectiveness, pricing effectiveness, delivery effectiveness, quality effectiveness and service effectiveness. These drivers include various performance markers that may be measured quantitatively by gathering information and applying them in SPSS. The works here may principally be quantitative with spellbinding measurable investigation. In the current world, practical supply chain management to help the triple primary concern, (nature, domain, and economy) is likewise included in the extent of supply chain performance drivers. This is relatively a quite new research region.
Generally, a superior supply Chain is an important and unique source of competitive advantage. Its importance is especially illuminated in Multinational companies such as Toyota. Putting this into consideration, the question that now begs for an answer is whether Toyota’s supply chain is effectively serving the organization. Without a doubt, Toyota ha...
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.